Jefferies Names Top Aerospace and Defense Stocks for Multi-Year Growth

Investing.com -- Jefferies has identified six aerospace and defense stocks positioned for strong growth through 2028, highlighting companies benefiting from production ramps, aftermarket expansion, and defense modernization programs.

The investment firm's top picks span commercial aerospace suppliers, integrated defense contractors, and satellite technology providers, with projected revenue growth rates ranging from 10% to 15% annually and significant free cash flow generation expected across the group.

1. Howmet Aerospace (NYSE: HWM) - Jefferies' top pick is supported by aerospace production ramps, spares growth, integrated gas turbine capacity additions, and technology cutovers that should drive revenue growth exceeding 10% annually through 2028. The company's approximately 50% airfoil market share in a constrained supply environment, combined with pricing power and productivity improvements, is expected to generate roughly 50% incremental margins, EBITDA margins above 35%, and approximately $2.8 billion in free cash flow.

2. DPC Holdings (NYSE: DPC) - Integrated gas turbine demand, new-generation aerospace engine ramps, and supplier diversification support a 15% revenue growth rate through 2028. Entry into the aerospace blades and vanes market, along with long-term agreements, productivity gains, and yield improvements should drive 27% EBITDA growth with margins approaching 22%. Additional upside potential exists from unmanned aerial vehicle programs and original equipment manufacturer share shifts.

3. RTX Corporation (NYSE: RTX) - Pratt & Whitney offers multi-year upside as geared turbofan durability improves, with rising maintenance, repair and overhaul output and contract repricing expanding aftermarket margins. Collins Aerospace should benefit from higher original equipment rates and a roughly $100 billion out-of-warranty installed base, while Raytheon converts record demand. Free cash flow is projected to grow at a 15% rate to approximately $12 billion in 2028 with conversion nearing 100%.

4. VSE Corporation (NYSE: VSEC) - Approximately 10% organic revenue growth through 2028 is supported by new Pratt & Whitney Canada and CFM56 contract wins, market share gains, and growing engine aftermarket demand. Precision Aerospace Group integration, proprietary repair expansion, and improving repair mix should drive EBITDA margins above 20%, stronger free cash flow conversion, and merger and acquisition optionality.

5. General Dynamics (NYSE: GD) - Unprecedented shipbuilding demand with growth supported by multi-year workforce and sourcing investments offers meaningful margin upside as productivity improves under schedule-incentivized contracts.

6. **MDA Space (TSX:MDA)** - Growth through 2030 is supported by constellation ramps, new awards for software-defined satellite platforms, and conversion of C$4.4 billion in backlog. Blue Canyon adds U.S. defense market access while CLS expands recurring data revenues and global distribution, creating additional award potential from a C$40 billion pipeline.

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